Dow Average Reaches Record, Oil Gain Boosts Energy Shares

Janet Yellen, chair of the U.S. Federal Reserve. U.S. data showed signs of steady progress in the labor market and improving investor confidence, a day after Fed Chair Janet Yellen said she expects rates to stay near zero for a “considerable time” after the bond-buying program is ended. Photographer: Pete Marovich/Bloomberg

The Standard & Poor’s 500 Index added 0.2 percent to
1,962.91 at 4 p.m. in New York and the Dow Jones Industrial
Average climbed 0.2 percent to an all-time high. Shire Plc
surged 17 percent as AbbVie Inc. weighed a higher offer for the
European drugmaker. Emerging-market shares completed their first
weekly drop in June on concern higher oil costs will curb
growth. Copper capped the longest rally in six months and coffee
advanced for its best day in a month.

U.S. and European stocks rallied this week after the
Federal Reserve said interest rates will remain low as the
economic recovery shows signs of accelerating. Commodities led
by oil rose for a second week as President Barack Obama said
he’s sending U.S. military advisers to assist the Iraqi army
battle an insurgency and is prepared to take more action.

“This is an energy bunny sort of market that wants to keep
marching higher and for a good reason,” Terry Sandven, chief
equity strategist at Minneapolis-based U.S. Bank Wealth
Management, which oversees $120 billion, said by phone. “The
U.S. economy is showing varying signs of improvement. Earnings
are rising, interest rates are low and inflation is elevated,
but not at extremes. That’s a favorable environment for equities
to march higher.”

Weekly Gain

The S&P 500 has climbed 1.4 percent this week. The index
has closed higher six straight days, its longest streak since
April. The gauge is trading at 16.6 times the projected earnings
of its members, up from 15.5 times at the beginning of the year.

Fed Chair Janet Yellen emphasized the need to put more
Americans back to work and downplayed concerns about asset-price
bubbles and incipient inflation.

Five out of 10 main industries in the S&P 500 advanced
today, with energy shares adding 1 percent for the biggest
increase. Drug companies rallied amid the AbbVie discussions.
Cross-border deals are accelerating as U.S. companies seek lower
taxes and ways to spend almost $2 trillion protected from U.S.
taxes in cash abroad. Merck & Co. increased 1.1 percent and Eli
Lilly & Co. climbed 3.6 percent to pace gains.

European Equities

The Stoxx 600 finished little changed, paring gains in the
final minutes of trading to trim a weekly gain to 0.3 percent.
AbbVie Inc. is considering raising ts takeover bid for Shire Plc
a fourth time after the European drugmaker rejected its latest
offer for about $46.5 billion, said two people with knowledge of
the matter.

TSB Banking Group Plc rallied 12 percent on its first day
of trading. Lloyds Banking Group Plc sold a 35 percent stake in
the lender, more than the 25 percent it had planned, because of
strong demand from investors.

“We’re still overweight global equities,” said Kelvin
Tay, chief investment officer for South Asia Pacific at UBS
Wealth Management. “Where risk assets are concerned, you tend
to benefit from low interest rates, and from the Fed’s
statement, we don’t think that interest rates are going to go up
anytime soon. There is some concern that the situation in Iraq
could escalate and bring oil prices up another notch.”

Ukraine Tension

The MSCI Emerging Markets Index slid 0.5 percent, bringing
this week’s loss to 0.4 percent. Russia’s equities ended two
days of gains as fighting erupted between Ukrainian government
troops and insurgents.

The Micex fell 0.6 percent, pushing its weekly decline to 1
percent. After the market closed, Ukraine announced a week-long
unilateral cease-fire in its easternmost regions. Earlier, NATO
condemned Russia for massing new troops in a move that cast a
pall over talks.

Gilts fell as Barclays Plc brought forward its forecast for
the first increase in Bank of England interest rates to this
year from the second quarter of 2015. The 10-year yield
increased three basis points to 2.76 percent, after reaching
2.79 percent on June 13, the highest since March 11.

The S&P GSCI index of 24 commodities added 0.1 percent for
a seventh day of gains, the longest streak in 11 months that
left the gauge at the highest level since February 2013. West
Texas Intermediate crude climbed 0.8 percent to $107.26, the
highest settlement since Sept. 18. Brent crude slipped 25 cents
to close at $114.81 a barrel in London, trimming a second weekly
gain.

Copper for delivery in three months rose 1.4 percent to
settle at $6,820 a metric ton in London, the biggest gain since
May 12. Zinc rose to a 16-month high on concern supply will
remain tight amid shrinking inventories.